Audit Prompts Reforms

Although a recent audit found lax internal oversight of its billing practices, the dean of UC Irvine’s medical school said Tuesday that reforms already in the works will ensure that the college collects all the money it is due.

A two-year audit of procedures at four of the College of Medicine’s 23 departments concluded that the school lacked a centralized system to determine if doctors bill correctly.

The Dec. 16 report by KPMG Peat Marwick and the university’s internal audit unit did not say if improper billing has caused the university to lose any revenue. But the college dean, Dr. Thomas C. Cesario, said, “I don’t believe we lost large amounts of money.”

The audit, requested by Cesario when he became dean in 1995, covered a two-year period ending June 30, 1995, and focused on internal business policies and procedures, not patient care. It involved the surgery, neurological surgery, orthopedic surgery and otolaryngology departments. Reviews of the remaining departments are either underway or planned, Cesario said.

“We want to make sure we are running a tight ship,” he said.

Among the report’s findings:

* The department of surgery routinely used a 1987 guidebook to determine patient charges even though the book is updated annually. Billing fees are not reviewed for accuracy unless the physician checks them before they are mailed, something rarely done.

* Many resident physicians “moonlight” at other facilities without prior approval, raising concerns that the university could be liable to malpractice claims involving outside practices.

* Department managers are not fully aware of internal control procedures performed by numerous employees, including those involved in bill collecting. Many managers also lack accounting training that would help them spot irregularities.

* Improper billing could affect reimbursement of physician and hospital costs by Medicare and by Medi-Cal, the government health-care programs that account for about a quarter of the college physicians’ $40 million in annual billings.

“We need to fix these things,” said Cesario, who predicted that a centralized billing system would begin running in two years and other checks and balances would soon address remaining problems. “We want to be competitive, so I’m anxious to follow the suggestions of the auditors to improve our business practices.”

Sidney H. Golub, executive vice chancellor, said, “Procedures can always be found to do things better, and that’s what we were looking for, better procedures.”

Neither he nor other administrators challenged the report’s findings, characterizing them as welcome outside input.

The officials took heart in one of the findings that said “it does not appear management seeks to ignore essential internal control concepts” and attributed many of the problems identified in the report to the college’s growing pains.

In the last three decades, it has evolved into a major teaching, research and patient-care center on 28 acres.

But the college traditionally has allowed its departments to function semiautonomously, a setup that helped entice high-quality faculty members who wanted to retain a sense of independence within their fields.

“That legacy is something we have been battling ever since,” Cesario said.

In the era of managed care, in which patients expect centralized care and billing, the old system may have outgrown its usefulness, officials said.

“One thing we all recognize is medicine is changing very rapidly,” Golub said. “A lot of the systems were put in place for an earlier era. The single practitioner and fee for service are simply irrelevant to what is going on in the financial area of medicine. We need to look at how money comes in and goes out and I think [the audit] is timely and appropriate.”